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CHAPTER IV.

OF CAPITAL.

§ 1. It has been seen in the preceding chapters that, beside the primary and universal requisites of production, labor and natural agents, there is another requisite without which no productive operations, beyond the rude and scanty beginnings of primitive industry, are possible: namely, a stock, previously accumulated, of the products of former labor. This accumulated stock of the produce of labor is termed Capital. The function of Capital in production, it is of the utmost importance thoroughly to understand, since a number of the erroneous notions with which our subject is infested, originate in an imperfect and confused apprehension of this point.

Capital, by persons wholly unused to reflect on the subject, is supposed to be synonymous with money. To expose this misapprehension, would be to repeat what has been said in the introductory chapter. Money is no more synonymous with capital than it is with wealth. Money cannot in itself perform any part of the office of capital, since it can afford no assistance to production. To do this, it must be exchanged for other things; and anything, which is susceptible of being exchanged for other things, is

capable of contributing to production in the same degree. VWhat capital does for production, is to afford the shelter, protection, tools and materials which the work requires, and to feed and otherwise maintain the laborers during the process. These are the services which present labor requires from past, and from the produce of past labor. Whatever things are destined for this use-destined to supply productive labor with these various pre-requisites—are Capital.

To familiarize ourselves with the conception, let us consider what is done with the capital invested in any of the branches of business which compose the productive industry of a country. A manufacturer, for example, has one part of his capital in the form of buildings, fitted and destined for carrying on his branch of manufacture. Another part he has in the form of machinery. A third consists, if he be a spinner, of raw cotton, flax, or wool; if a weaver, of flaxen, woolen, silk, or cotton, thread ; and the like, according to the nature of the manufacture. Food and clothing, for his operatives, it is not the custom of the present age that he should directly provide ; and few capitalists, except the producers of food or clothing, have any portion worth mentioning, of their capital, in that shape. Instead of this, each capitalist has money, which he pays to his work-people, and so enables them to supply themselves; he has also finished goods in his warehouses, by the sale of which he obtains more money, to employ in the same manner, as well as to replenish his stock of materials, and to replace his buildings and machinery when worn out. His money and finished goods, however, are not wholly capital, for he does not wholly devote them to these purposes; he employs a part of the one, and of the proceeds of the other, in supplying his personal consumption and that of his family, or in hiring grooms and valets, or maintaining hunters and hounds, or in educating his children, or in paying taxes, or in charity. What then is his capital ? Precisely that part of his possessions, whatever it be, which he designs to employ in carrying on fresh production. It is of no consequence that a part, or even the whole of it, is in a form in which it cannot directly supply the wants of laborers.

Suppose, for instance, that our capitalist is a hardware manufacturer, and that his stock in trade, over and above his machinery, consists at present wholly in iron goods. Iron goods cannot feed laborers. Nevertheless, by a mere change of the destination of these iron goods, he can cause laborers to be fed. Suppose that with a portion of the proceeds he intended to maintain a pack of hounds, or an establishment of servants; and that he changes his intention, and employs it in his business, paying it in wages to additional work-people. These work-people are enabled to buy and consume the food which would otherwise have been consumed by the hounds or by the servants; and thus without the employer's having seen or touched one particle of the food, his conduct has determined that so much more of the food existing in the country has been devoted to the use of productive laborers, and so much less consumed in a manner wholly unproductive. Now vary the hypothesis, and suppose, that what is thus paid in wages would otherwise have been laid out, not in feeding servants or hounds, but in buying plate and jewels; and in order to render the effect perceptible, let us suppose that the change takes place on a considerable scale, and that a large sum is diverted from buying plate and jewels to employing productive laborers, whom we shall suppose to have been previously, like the Irish peasantry, only half employed and half fed. The laborers, on receiving their increased wages, will not lay them out in plate and jewels, but in food. There is not, however, additional food in the country; nor any unproductive laborers or animals, as in the former case, whose food is set free for productive purposes. Food will therefore be imported, if possible; if not possible, the laborers will remain for a season on their short allowance : but the consequence of this change in the demand for commodities, occasioned by the change in the expenditure of capitalists from unproductive to productive, is that next year more food will be produced, and less plate and jewelry. So that again, without having had anything to do with the food of the laborers directly, the conversion by individuals of a partion of their property, no matter of what sort, from an unproductive destination to a productive, has had the effect of causing more food to be appropriated to the consumption of productive laborers. The distinction then, between Capital and Not-capital, does not lie in the kind of commodities, but in the mind of the capitalist-in his will to employ them for one purpose rather than another; and all property, however ill adapted in itself for the use of laborers, is a part of capital, so soon as it, or the value to be received from it, is set apart for productive employment. The sum of all the values so destined by their respective possessors, composes the capital of the country. Whether all those values are in a shape directly applicable to productive uses, makes no difference. Once appropriated to that end, they do not fail to find a way of transforming themselves into things fitted to be applied to it.

$ 2. As whatever of the produce of the country is devoted to production is capital, so, conversely, the whole of the capital of the country is devoted to production. This second proposition, however, must be taken with some limitations and explanations. A fund may be seeking for productive employment, and find none adapted to the inclinations of its possessor ; it then is capital still, but unemployed capital. Or the stock may consist of unsold goods, not susceptible of direct application to productive uses, and not, at the moment, marketable; these, until sold, are in the condition of unemployed capital. Again, artificial or accidental circumstances may render it necessary to possess a larger stock in advance, that is, a larger capital, before entering on production, than is required by the nature of tal things. Suppose that the government lays a tax on the production in one of its earlier stages, as, for instance, by taxing the material. The manufacturer has to advance the tax, before commencing the manufacture, and is therefore under a necessity of having a larger accumulated stock

than is required for, or is actually employed in, the production which he carries on. He must have a larger capital to maintain the same quantity of productive labor; or (what is equivalent) with a given capital he maintains less labor. This mode of levying taxes, therefore, limits unnecessarily the industry of the country; a portion of the fund destined by its owners for production being diverted from its purpose, and kept in a constant state of advance to the government.

For another example; a farmer may enter on his farm at such a time of the year, that he may be required to pay one, two, or even three quarters' rent before obtaining any return from the produce. This, therefore, he is compelled to pay out of his capital. Now,rent, when paid for the land itself, and not for improvements made in it by labor, is not a productive expenditure. It is not an outlay for the support of labor, or for the provision of implements or materials the produce of labor. It is the price paid for the use of an appropriated natural agent. That natural agent is indeed as indispensable (and even more so) as any implement; but the having to pay a price for it, is not. In the case of the implement, (a thing produced by labor,) a price of some sort is the necessary condition of its existence; but the land exists by nature. The payment for it, therefore, is not one of the expenses of production; and the necessity of making that payment out of capital, makes it requisite that there should be a greater capital, a greater antecedent accumulation of the produce of past labor than is naturally necessary, or than is needed where land is occupied on a different system. This extra capital, though intended by its owners for production, is in reality employed unproductively, and annually replaced, not from any produce of its own, but from the produce of the labor supported by the remainder of the farmer's capital.

Finally, that large portion of the productive capital of a country which is employed in paying the wages and sala

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